A 24-year-old man arrested in counter-terrorism raids in Sydney's west will remain behind bars until his next court appearance in March.

Merrylands resident Abdullah Salihy has been charged with knowingly collecting or making a document connected with terrorism - an offence that carries a maximum penalty of 15 years in prison.

He was arrested at his home on Wednesday under a joint NSW Police and Australian Federal Police operation.

Police will allege Salihy knowingly made a document connected with the preparation for a terrorist act on police buildings and the Woolloomooloo naval base on Sydney Harbour.

Salihy did not appear at his bail hearing at Parramatta Local Court on Wednesday and did not apply for bail. It was formally refused.

He'll next appear at Central Local Court via an audiovisual link on March.

A second man charged following the counter-terrorism raids in Sydney has not applied for bail and will remain in custody ahead of his next court date.

20-year-old Mohammad Almaouie was on this morning charged with conspiracy to do an act in preparation to commit a terrorist act.

Police allegedly found documents that listed Sydney's Woolloomooloo naval base as a potential target during a search of his Bankstown home, and the Merrylands house of his co-accused, Abdullah Salihy.

He didn't apply for bail, which was formally refused at Parramatta Local Court this afternoon, and he is next due to appear at Central Local Court on January 20.

The two men were charged after Australian Federal Police and NSW Police Force officers raided homes in Bankstown and Merrylands on Wednesday.

Their arrests follow the seizure of documents and other material in raids carried out last year.

The raids took place under Operation Appleby, which started in September last year and has been focusing on a group of about 20 young men who police believe are committed to carrying out a terrorist attack in Australia.

'We will allege that the Woolloomooloo navy base was one of those locations,' NSW Police Deputy Commissioner Catherine Burn told reporters in Sydney.

Ms Burn said it had been a complex, long-standing investigation into alleged terrorism plots to carry out an attack in NSW.

'Since that time we have conducted a number of investigative strategies and this has resulted in us arresting and charging 11 people with terrorism offences and related offences in regards to this alleged terrorist attack,' she said.

The latest arrests take the total of people charged under Operation Appleby to 13.

'These are very serious charges,' Ms Burn said.

'What we will be saying is that a group of people came together with the intent to do something and they started to make preparations.'

While police allege the pair arrested on Wednesday had joined with several others and had made preparations for an attack, Ms Burn said there was no specific threat.

'I do need to stress that this activity today relates to events of last year,' she said.

She encouraged people to enjoy their Christmas holidays but to alert police if they see anything suspicious.